Sensex bucks global trend, adds 125 points

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Aug 25, 2006, 02.59 AM IST

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MUMBAI: The stock market shrugged off the bearish start and the weak trend in world markets to end over 1% higher, led by a rally in index heavyweight Reliance Industries. Brokers attributed Thursday's upswing to a combination of short covering of positions in the derivatives segment and selective institutional buying in the cash segment.

Down over 100 points at noon, the Sensex staged a smart recovery during the latter half of the session on the back of a recovery in select blue chip shares. RIL was the flag bearer for the winning stocks, rising over 4% to close at Rs 1,106. After touching the day's low of 11,297, the Sensex bounced back to scale an intra-day high of 11,567, up 125 points of 1.1%, from the earlier 11,532. The NSE 50-share Nifty climbed 35 points to end at 3,370.

For the second consecutive session, mid-cap and small-cap shares underperformed their large-cap counterparts. The BSE Mid Cap Index rose 0.25% to close at 4,771, while the Small Cap Index ended 0.6% up at 5,783.

Key US and Asian markets ended weak on concerns about a slowdown in the US economy, triggered by the report from the National Association of Realtors that sales of houses have dropped in July, recording the lowest figure since January '04.

Japan's Nikkei-225 slipped 1.3% to 15,961 while Hong Kong's Hang Seng declined 1.2% to 16,883. South Korea's Kospi fell 0.7% to 1,316 while Singapore's Straits Times was down 1% at 2,446. In the US, the Dow Jones Industrial Average fell 0.4% to 11,298 while the Nasdaq Composite Index shed 0.7% to close at 2,135 on Wednesday.

"The market was driven by a smart rally in RIL, which attracted good FII buying on Thursday. Given the good liquidity inflow, the market may go up by another 300-400 points in the near term," said Gagan Banga, director, Indiabulls Securities. Some market participants feel the slowdown in the US economy could even have positive implications for India.

"Given that India is the net importer of commodities including oil, a US slowdown may benefit the country as commodity prices will come down. IT exports will go up because there will be more outsourcing opportunities available to India.

The rupee will be more stable, making the country more attractive destination for foreign investment," said Ved Prakash Chaturvedi, CEO, Tata Asset Management. Bharti Airtel, Hindalco, Gujarat Ambuja, ACC, Tata Steel and Reliance Communication were the other prominent gainers of the day., gaining between 2% and 3.8%. Overall, the market breadth remained positive. Out of a total of 2,548 scrips traded on the BSE, 1,346 rose, while 1,121 lost ground on Thursday.